The American Recovery and Reinvestment Act of 2009 added computer equipment and technology expenses for students to the list of college expenses that can now be paid for by a 529 plan during 2009 and 2010.   A 529 plan is an educational savings plan that allows parents or other individuals to set aside funds for future college costs.  Although the contributions are not deductible on your federal tax return, the investments within the plan grow tax-deferred and the distributions for qualifying expenses are not taxed at the federal level.

In addition to the cost of the equipment, these allowable expenses include Internet access and related services.  Obviously, the student (the beneficiary of the plan) must use the items paid for by the plan while they are enrolled at an eligible educational institution.  The IRS defines an eligible educational institution as any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education.

Tags: 529 plans, college savings plans, educational expenses

This entry was posted on Monday, September 21st, 2009 at 3:22 pm and is filed under Individual Taxes, Tax & Legal Changes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.